White Paper: Data Optimization in ASPAC

8/14/2019 White Paper: Data Optimization in ASPAC

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The NewOpportunities for

Enhanced DataOptimization inAsia Pacific


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Table of Contents

Introduction.........3

An Emerging Travel Market..........5

New Solutions From Expense Providers........6

More Solutions from the TMCs..8

A Third Option: Data Aggregators......10

Challenges in Consolidating the Data.11

Managing Data Means First Managing Your Travel..12

A Best Practices Approach to Data Collection..15

Conclusion...17

Case Study: Monash University Implements Enhanced Data18

Case Study: JPMorgan Chase Consolidates andTightens Travel Policy in Asia Pacific..19


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IntroductionAs multinationals expand their operations in Asia Pacific and business travel to theregion grows in leaps and bounds, the demand for standardized, consolidated data ontheir employees air, hotel, and car hire spend is rising fast. Asia Pacific, where travelmanagement is still evolving, is the new frontier of travel data.

Detailed, comprehensive datain the case of air it would include flight segments andclass of serviceallows corporate travel managers (CTMs) to get a better view of theirtravel spend. It gives them oversight of their costs and allows them to identify waste andredundancy, such as two travelers renting separate cars to go to the same meetingrather than sharing a vehicle. The data enables CTMs to negotiate better deals withpreferred carriers, hotel chains and car-rental firms. Most importantly, it enables them totrack and monitor compliancewhether travelers are patronizing their preferredsuppliers. Good data is also essential to tracking travelers for better management ofsecurity.

Multinationals are driving this demand. The quest for good data, however, is spreadingto domestic companies and organizations as well, particularly in Australia, New Zealand

and Japan, which are the most mature markets in the region (though the Japanesemarket is a world unto itself, with different practices and priorities, as will be discussed).The demand for data comes from the multinationals because they are educated by aglobal partner who heads the office centrally, said Angela Jones, vice president ofcommercial payments e-solutions, Asia Pacific, at MasterCard Worldwide, based inSingapore. Theyre telling the regional office, we get this so you should be able to do ittoo. But the need locally is no less important. In Australia and New Zealand, the datais key, even for local businesses, said Jones. A lot of this is driven by universities andthe government, which are big users of cards for business services.

Suppliers, from card associations like MasterCard to issuing banks to travelmanagement companies (TMCs) and expense management vendors, are expanding

their data options to meet this demand. Companies now have the opportunity to movefrom paper-based invoices to prepopulated electronic expense reporting, which not onlysaves travelers the time and hassle of filling out forms manually, but also results in moreaccurate expense data, as well as saving on paper. The credit card providers also havethe capability of providing more detailed data for each transaction, standardizing andconsolidating it for analytical reports that enable CTMs to identify leakage of the travelprogram. Electronic delivery of reports makes the data available on a real-time basis.

TMCs and third-party travel aggregatorsfirms that collect, standardize and analyze allof a companys data on an outsourced basis--are also providing in-depth analysis of T&Edata to their clients in user-friendly formats designed to be actionable. Its not just aboutgetting the data, but also knowing how to utilize the information for savings, be it

switching to another carrier, offering more competitive pricing or monitoring yourpreferred suppliers to make sure theyre giving your travelers the negotiated rate.

That being said, there are numerous challenges. Many Asian countries have a culture ofpersonal service that puts a premium on hand-delivered airline tickets and telephonereservations made by personal secretaries. In India, multinationals are installingimplantson-site travel agents--at their facilities, realizing how important high touch is tothe countrys culture. The regions tradition of personal service has stalled adaptation of


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automated systemson-line booking, e-tickets, and electronic expense reportingthatexpedite the collection, standardization and consolidation of travel data for companies.

Furthermore, there is a high degree of fragmentation. Many independently owned hotelsarent in the GDSes. Even major chains may have a variety of property managementservices among their properties in the region, making it difficult for them to get chain-

wide datamuch less provide it to their customers.

The region is also characterized by numerous domestic GDSes. Chinas TravelSky is aclosed system that is highly restrictive: all domestic bookings made within the countrymust be ticketed through the system. The GDS doesnt list hotels, which must be bookedby fax or phone (those owned by international chains can be booked through thestandard GDSes). In an ironic twist, Japan, one of the most high-tech countries in theworld, has its own home-grown GDSesfour to be exact, each owned by a differentcarrier and characterized by total lack of inoperability with the others.

These challenges are requiring all the parties involved in the travel management processto work together, in order to provide the standard of data sought after by large

multinationals. We see data as critical to delivering further value to our clients, nomatter who they are or where they are in the world, said Lesley Mattock, head of globalmanagement information at HRG, based in the U.K. Data consolation is considered soimportant by HRG in our ability to help clients manage their programs that we alsoactively support data hand-off to clients own choice of third-party data consolidators.


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An Emerging Travel MarketAsia Pacific lags far behind the mature travel management markets of the U.S. andEurope, but in terms of rate of economic growth, it is rapidly outpacing the Wests. Hometo more than half of the worlds 6 billion people, the region is incredibly diverse, withmore than 20 languages and cultures. The fastest growing economy in the world is

China, which is growing at a clip of 11 percent; India is second, at around 8 percent.Many of the other Asian countries arent far behind.

The frenzied business activity, be it manufacturing, outsourcing of services, or selling tothese new consumer markets, is spurring travel to and within the area. According toRam Badrinathan, senior analyst with PhoCusWright, a travel research firm, based inBombay, air travel in both India and China is growing in the double digits. In India thegrowth has been particularly dramatic, with domestic aviation growing by 51 percent in2006. Nicolas Pierret, director of global accounts, Asia Pacific at Carlson WagonlitTravel (CWT), based in Singapore, said that CWT has been growing over 30% annuallyin the past few years as corporate travel develops rapidly in the region

While national carriers still dominate in some markets, low-cost airlines have beensprouting up in others, including India and Australia. Besides driving down fares, thestart-up airlines are also triggering the development of on-line booking. Jetstar inAustralia and Kingfisher in India are also in the GDSes and have become popular withbusiness travelers. China has invested heavily in its airports, and carriers all over theregion now offer a level of service and safety thats on par with the West.

While airline commissions are common, theyre being scaled back in most Asiancountries. In Australia and New Zealand, all of the carriers have eliminated commissionson domestic travel; Singapore Airlines is also at zero. This is also a trend being driven bythe low-cost carriers.

On the travel management side, the large TMCsCWT, American Express, FlightCentre, HRG Worldwide, and BCD Travelare consolidating in the region. To serve theneeds of their multinational clients, they are developing global networks. Due togovernment regulations and market conditions, in some countries they are partneringwith a local provider. In China, for example, a foreign company is required by law to forma joint venture with a local travel agency. In other countries, the TMC may wholly own itsbranded locations.

The mega TMCs are working hard to collect data on air, hotel and car rental bookings.Card associations are working closely with the TMCs to match this data to the spenddata on the card. This allows a comprehensive, accurate picture of the transactionwhospent what for whatto be pieced together, which is provided to the customer

seamlessly.

The breadth and depth of data available still is deficient compared with the West. But thepast 18 months have seen much improvement. CTMs are finally beginning to be able toget their arms around their travel spend and, by using the tools provided by the TMC orcard provider, slice and dice the data to find out such crucial information as how manyand which travelers are using the corporate card and booking preferred suppliersthrough the TMC. Theyre starting to gain control over a process that just a few yearsago wasnt managed at all.


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Suppliers are also providing data to fill in the gaps, although some dataparticularly inthe hotel sectoris still rudimentary, compared to the U.S. and Europe. Right now, thereal breakthrough is happening on the airline side, which at most corporations accountsfor the lions share of T&E.

One key aspect of this trend is user flexibility. There are a variety of ways in whichcorporate travel departments can obtain the datafrom the TMC, the card provider, or athird-party data aggregator, such as TRX, Cornerstone, or Hi Mark Software. For somecustomers, MasterCard is providing the reconciliation data to the TMC, which in turn ismatching the data with its booked information and standardizing it for the customer; theTMCs are also providing analysis and pre-trip approval services based on the data.

For others, MasterCard is partnering with the GDSes and TMCs (to be followed soon bycar-rental firms and hotel chains) to obtain point-of-sale data to enrich the informationthat is provided on the expense report and for travel expense reconciliation. Its alsoworking with the major expanse management vendors to ensure their systems areconfigured to accept the data.

New Solutions from Expense ProvidersWhile American Express has long dominated the region, the card associations andissuing banks have been rapidly expanding in the region, offering CTMs new travel dataoptions.

Traditionally, the planning and booking of travel at the front end and settlement ofexpense report and corporate card charges at the back end were separate functions. Butwith the availability of products such as MasterCards Smart Data On Line, a fewcorporations are receiving consolidated data in which the booking data is matched to theexpense data, resulting in more accuracy and enabling clients to get a morecomprehensive view of their travel spend and patterns.

The global, web-based tool provides enhanced data on air spend, including origin anddestination, class of service, and number of flight segments. The card association isobtaining the data from the GDSes, which are improving their direct connect availability(direct access to the suppliers inventory) with the carriers. At Abacus, for example, thedominant GDS in many regions of Asia, 12 percent of the 280 suppliers now have directconnect availability.

Within the next couple of months, MasterCard will also begin providing enhanced dataon Avis rental cars in Australia and New Zealand. The data will consist of duration ofrental, with dates and times; location; kilometers driven; vehicle type; booking reference;and a breakdown of charges, such as fuel, insurance and one-way fees, said Paul

Rankin, programming services manager at AB Group, based in Sydney. We have avery large customer who is driving the whole project, he said. Once in place, the datawill be the most comprehensive Avis is providing anywhere.

MasterCard is also partnering with leading TMCs and expense management providerssuch as Concur and Spendvision to provide comprehensive data to the client in astandardized, electronic format that can be integrated into the companys accountingsystem. Where it used to take a month to get a report, now that report can be deliveredin a day. And the information is more accurate, saving time on the laborious task of


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matching data from the travel agency with expense reports and/or data from thesupplier.

The customer can access our reporting tool and retrieve the information, reconcile on-line by travel manager or card holder, and post information to the general ledger, saidJones. This is an end-to-end solution.

Traditionally, when companies tried to match the data from the card to the travel agencybooking, the information wouldnt link up. Thats because the booking data is far moredetailed, but it doesnt indicate if it was paid for. The expense data shows if the traveleractually took the flight and it will reflect the higher cost if, for example, the travelerupgraded on the flight. Also, the card captures data on transactions not booked throughthe TMC, such as a travelers on-line booking of a flight on a low-cost carrier. This is amajor benefit, especially in Asia Pacific, where compliance to the preferred bookingchannel is a huge problem.

One stumbling block in the region to more usage of corporate cards is additionaltransaction detail such as travel itinerary and cost/financial accounting information.

MasterCard is working closely with its existing merchant partners as well as adding newones in the region to build more critical mass, said Seth Friedman, vice president ofglobal corporate commerce development at MasterCard, based in Purchase, N.Y., USA.Were growing the number of merchants who can support a full travel content program,he said, adding that the trend is being driven by demand: Multinational companies areconsolidating their business across the mega agencies and other large travel merchants.As they consolidate, global customers have needs in terms of service and informationstrategy.

Friedman added that corporations themselves are restructuring their travel procurementfunctions to manage travel procurement on a more global or regional basis, versus acountry-by-country approach. We see corporations moving their travel processing to

regional service centers. Globalization of information is complicated to deliver.

Singapores United Overseas Bank (UOB) offers enhanced data to its customers inSingapore, Indonesia, Hong Kong, Malaysia and Thailand via MasterCards Smart DataOnLine. This enrichment of data originates from participating corporate travel agentsas well as global distribution systems.

In comparison with the less popular lodge cards which only capture air fares andauxiliary charges, a corporate card can capture more information including other traveland entertainment expenses such as room nights and meals. The corporate card istherefore better able to give a complete picture of overall travel and entertainmentspending to both the traveler and the company, said Ms Gan Ai Im, Head of Cards and

Payment Products, United Overseas Bank (UOB).

As UOB has a corporate travel agency, it is well-placed to understand the businesstravel needs of its corporate cardholders as well as provide a one-stop travel service forthem.

In addition to providing card association enhanced data products, a few of the leadingissuing banks in the region are introducing their own branded enhanced data productsfor corporate clients.


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Citis Commercial Cards program (covering both corporate and purchase cards) isavailable across Asia Pacific and globally. The program is growing rapidly, with plans foran additional 10 new countries in Asia, Europe and Latin America to be launched in2007-08. China and India are two new countries.

Philip Glickman, director of sales, commercial cards in Asia Pacific, based in HongKong, said, Theres been extraordinary demand in Asia. Companies are looking forstandardized functionality and an acceptance-based solution that allows them to capturedata and insert it into the ERP systems while integrating their local programs with theirregional or global ones. In addition, were seeing local companies moving to thecorporate card as a means of replacing the use of personal cards for control andcompliance reasons. To facilitate the growth, the bank has an implementation processin place to ensure that the client is provided with a single point of contact to manageoverall implementation. This specially trained contact oversees in-country support forprogram set up; account management and technology back up.

AirPlus International offers centralized travel payment solutions that allow the company

to pay for air and train trips as well as rental cars, meals and entertainment, whichminimize costs and streamline travel invoicing. In Asia Pacific, its products are offered in11 countries, including Australia, Singapore, China, Hong Kong, and Japan, according toVictor Cheng, AirPlus Manager of Global Development, based in Hong Kong.

With an AirPlus company account, which is usually lodged at the travel agency, all thepre-trip data, such as air spend, hotel, and car rental can be captured. Enhanced data isavailable for air, including routing, travelers name, class of service and even coupondata. AirPlus also issues a corporate card, enabling corporations to capture other tripdata, such as hotel, car rental and meals. An Internet-based solution, AirPlus InformationManager, enables CTMs to analyze the data, which leads to better compliance, a morecomplete overview of the cost, and faster realization of cost savings.

More Solutions from the TMCs

The large TMCs are also moving aggressively to expand and enhance their dataconsolidation services to corporate clients.

CWT is rolling out a new database, called GLORY, in Asia Pacific, allowing dataconsolidation on a daily basis into a single, global repository, according to Pierret. Thedatabase is accessible by a brand new web-based interface, the Program ManagementCenter. This PMC makes standardized, global data available to clients anywhere in theworld. Next-day availability of the data in GLORY is currently available in Australia, withother markets such as Hong Kong and Singapore available by year-end. The PMC also

integrates other type of data for those clients who want it, Pierret said, such as creditcard data to be matched with booking data, or pre-trip data for traveler tracking orcompliance monitoring purposes

The PMC fulfills a need for more customized reporting, as it enables CTMs to access thedata in GLORY and analyze it in numerous ways, such as by hierarchy and region.Clients use dashboards, customized reports and other options to break out the data theway they like. Its more of a pull than a push, said Pierret, explaining that the bigdemand of customers is for flexibility. Every time we push it, there is a good chance it


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doesnt come the way you want it. The key is to make on-demand reporting both flexibleand user friendly.

With the sheer multiplicity of countries, GDS and back-office systems in use, it issometimes complex to pull that data consistently in this region, he added. Processesrelying on front-end data capture can prevent multiple and complex developments in the

back end. That being said, TMCs still rely on some manual processes in some countriesto circumvent technical hurdles. In Vietnam or Taiwan, for example, data upload is stillmanual.

FFCm Travel Solutions, the corporate division of Flight Centre, has also established atravel management system that provides enhanced data to clients. For some clients weare sending it to the credit card companies, said Clare Fraser, financial systemsmanager for Australia/New Zealand, based in Christchurch. For others, we enhance itin-house and do consolidated reporting, with all their details. We give our clients data onwhere theyve flown and who theyve flown, with a lot of management reporting.

While UATP cards, the centrally billed cards for air, are quite common, the trend is

growing for corporate cards, thanks to the recent arrival of MasterCard and Visa into themarket. In addition, theres a big push for expense management systems, she said.

Flight Centre can send enhanced data from most of the local carriers. However, it onlyhas booked data for hotels, and matching this with the credit-card reports is complex.Fraser said one complication is that the agency doesnt know which credit card thetraveler will be using at time of booking. We have to wait for the reject files at the end ofthe month and then try to match the reports, she said. (Reject files consist of theunmatched data from the credit card companies.) We have an estimation of what thecost will be, but the traveler may have upgraded or have additional charges and thedollar amount wont match. In addition, some travelers dont use the corporate card, sothe information is lost.

Another challenge is the multiple GDSes. Were developing reporting that covers andconsolidates all sides, said Fraser. Australia and New Zealand use the same platform,so consolidation of data for the two markets is relatively simple, but in other countries theprocess can be complex.

To address the needs of those companies with embryonic travel departments, FlightCentre is considering offering a data dump, which Fraser explained was a flat file witha pile of information from which clients could pick and take what they wanted. It wouldhelp serve the needs of smaller clients who dont want to sign on for a corporate card butstill want extra data. Were working in conjunction with Concuror other expensemanagement provider of the clients choiceto provide this information. Other clients

can pull this data into their own databases, and it gives them much more flexibility.

Other TMCs are working closely with regional and local agencies to develop networksthat enable them to collect and consolidate global data for their clients. HRG, forexample, is consolidating data from its service centers along with data from other TMCsand third-party suppliers, according to Mattock. He noted that this is a good solutionbecause of the regions diversity. We use applicable local or regional reporting solutionsin each country, which are integrated into a central database from which HRG canprovide multinational clients with consolidated data.


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The key challenge is consolidating pre-trip data, particularly for security purposes, saidMattock. Currently no security product can take pre-trip data feeds from systems likeTravelSky in Chain, Arga in Indonesia, Topas in South Korea, and the various localCRSes in Japan. We are developing an XML feed to facilitate pre-trip extracts into oursecurity tracking tool, HRB TravelWatch. He noted effective and comprehensive data

collection is dependent on clients providing appropriate reference information at thepoint of sale (or through profiles), such as accurate employee reference codes, ProjectID or Cost Centers. Clients success at inputting the information is dependent on theirorganizational hierarchy and structure.

HRG provides analysis of trends through its Executive/Board Reporting tool, whichprovides five or six key performance indicators that allow senior management to havethe pulse of their travel program and its effectiveness. Like its competitors, it offers aglobal security data service that enables managers to track travelers and issues alerts totravelers should a disaster or terrorist event occur at their destination. And it can alsotrack and analyze travel patterns and practices, such as duplicate bookings refunds, andsuggest proscriptive actions.

HRG is also testing a new integrated booking and expense management tool with aclient in Australia. It enables the booking to become the expense report, to which othercosts are imported automatically from card expenditures and then topped off with out-of-pocket expenses. Making the booking creates project codes and the entire report can beflowed through to SAP or any other enterprise application, said Mattock. The keymessage from our clients is that system and process integration is a goal.

Smaller agency networks are also getting up to speed. RADIUS, for example, a globaltravel agency consortium based in Bethesda, Maryland, USA, reports that many of itsagencies in Asia Pacific have multiple GDSes as well as local booking solutions. Theflexibility of our platform allows for the collection of data from multiple sources, said

Stuart Wines, RADIUSs vice president of Asia Pacific. In addition, new technologies inthe marketplace are emerging to help streamline the analytical processes and empowerthe travel manger to better understand their data and establish more effective travelprograms.

A Third Option: Data AggregatorsSome multinationals are using a third-party data aggregator, such as TRX, Hi-MarkSoftware or Cornerstone. (Agencies and other suppliers also utilize these datacollectors.) The aggregators do the matching for you, collecting the data from multiplesources and standardizing the format, which is linked to the clients GL systems, easingthe budget management process. TRX, for example, collects data from every continentexcept Africa and Antarctica. Its mid-office point-of-sale tool can add components that

arent necessarily in the credit card data, such as reason for trip, project code, GL code,the clients billing code, etc., which can improve the cash flow of the corporation. Thedata is held in a warehouse until the credit-card feed is released and matched.

While such systems are expensive, one advantage is that the corporation owns the data.According to TRX, corporations are experiencing many changes in the TMCs, withmergers, acquisitions, etc. Many corporations are wishing to own their own data so thatthey retain the flexibility to change suppliers and at the same time control the information


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themselves. This is also true of other components of an end-to-end solution (bookingtools and GDS contracts).

These solutions are customized to the client and require CTMs to decide which and howmany fields under each category of data (air, hotel and car) they want to obtain. Bestpractices require flexibility, noted TRX. The CTM can control access to the data

internally by establishing hierarchical levels, to ensure security.

Such systems represent the cutting edge of technology. Web interfaces have createddata-aggregating capabilities that werent possible just a few years ago and have helpedreduce costs. Companies can manage their data more economically thanks tobreakthroughs in data warehousing. Tech innovations have also resulted in new types ofdelivery of the data, such as dashboards and visualization aids. These systems andtools, available from the aggregators as well as the TMCs, enable CTMs to analyze theirdata in speedier, more user-friendly ways.

Challenges in Consolidating the DataWhile all of these options are enabling CTMs to manage their programs more efficiently,

capturing and consolidating the data isnt a simple process. The challenges in AsiaPacific are twofold: difficulty in obtaining a consistent level of data, due to supplierfragmentation and limitations in internet and other technologies in some domesticmarkets, and the paucity of good travel management practices.

The Problem of Inconsistent DataIn general, the best data is available in Australia, New Zealand, Singapore, and HongKong. In emerging markets like Vietnam the data is minimal.

The biggest challenge is the fact that many hotels are not in the GDS, especially in India,China and Japan. The only way to capture the data is for the traveler to book theproperty through the travel agency, but many employees are accustomed to having their

secretary do the booking.

Each country has its quirks. While Japan, for example, accounts for a third of all travel inthe region, only 12 to 15 percent of travel is managed by TMCs, according to CWT; mostcompanies use in-house travel agencies or local travel agents instead. Global GDSesaccount for less than 40 percent of the market, with most flights booked through the fourcountry GDSes.

TMCs arent able to integrate the Japanese domestic data into their global databases.CTW, for example, only consolidates international flights and hotels for Japan.Domestic data is in Japanese and theres not much you can do with it anyway, since theairlines wont negotiated with corporations, Bezer said. We do offer local domestic

management information. Global companies thus could obtain the data, but it would notbe integrated with the rest of their spend.

Progress is occurring quickly in other markets. As recently as a year ago, India was ablack hole, said Badrinathan. But thanks to the efforts of the mega TMCs, airline flightsegment data is now available in the country. Use of credit cards is growing and thelaunch of several on-line agencies last year is helping push e-ticketing and on-linebooking in the country, he said.


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China is still a tightly restricted travel market, although the TMCs and card providers aredevising ways to work around the constraints. To capture data from the bookings madein TravelSky, for example, travel agents will make a dummy booking in the GDS.

China doesnt allow credit cards issued in a foreign currency to be used by domestictravelers. Companies have to supply their employees in the country with local currency

cards. MasterCard provides both locally issued cards and international cards forcorporate employees traveling outside the country. By issuing the two cards, MasterCardhas the ability to consolidate and report both accounts for the user, one in localcurrency, the other in U.S. dollars, said Jones. We report them separately, but the datais provided through one view.

Hotel e-folio data, in which a transaction is broken out by rate, type of amenity, and otheritems, is not available in Asia Pacific and wont be for some time at many chains,according to hotel industry executives. The large international chains are dealing withmore basic priorities: Marriot, for example, is developing two-way linkage between itsproperties in the region and the chains central reservation system, with implementationdue to be complete at the end of 2008. This would enable individual properties to

exchange information with the central rez system; currently, the capability is only fromthe central rez system to the hotels.

There have been attempts to input more properties in the GDS, However, Fred Miller,Marriotts vice president of travel industry relations, based in Washington, D.C., USAsaid the difficulty is that many travelers dont book through the GDS.

Some CTMs that are collecting enhanced data and have a strong policy are requiringtheir travelers to input the missing data into the hotel expense report. One large tech firmwith offices in Manila, for example, has adopted an automated tool that enables travelersto input the name of the property in the report. They are also required to break out thehotel charge on a daily basis, showing meals and other itemized expenses.

Detailed information on rental cars is also not available. Data is limited to name ofcompany and a dollar amount (although as mentioned, Avis will be providing enhanceddata in a few months to MasterCard).

Managing Data Means First Managing Your TravelCorporations wont be able to collect the data that is available without putting in place aneffective travel management program. Therefore, its imperative that companies takethese preliminary steps:

Implement a corporate card.The single best way to start tracking the companys travel expenses is to have travelers

pay for their travel with a corporate card. Yet outside of Australia and New Zealand, useof corporate cards is the exception. China, India, Indonesia, and Thailand are marketswhere use of credit cards is still minimal. In Japan, credit card usage is less than 50percent among companies, according to CWT.

Many corporate travelers in the region still rely on personal credit cards and cashadvances. One reason is that Asian cultures put a premium on personal service. Anotheris the relatively high merchant fees and resistance by some airlines to paying the fees,said Mike Bezer, vice president of global sales Asia Pacific, at CWT, based in


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Singapore. The merchant fees in China, for example, are four percent for foreign-issuedcards. Some airlines refuse to absorb the credit card merchant fees and either raise thefare or pass the cost onto the corporation.

Another challenge: many hotels in the region dont accept credit cards. TMC agents willmanually key in the data at the time of booking if payment is with cash rather than a card

(which would automatically capture the data). The large TMCs are undertaking this taskfor their clients, working with individual agents in some markets to input the information.

As corporations establish manufacturing and shared service centers throughout Asia,many of their employees are traveling to remote areas, where acceptance and controlare issues, said Glickman at Citi. Travelers are going to more isolated areas throughoutthe region. Acceptance is essential to providing companies with the opportunity tocapture more data and better manage their travel and procurement expenses.

Some companies are tightening up their travel policies to encourage more travelers touse the card, as well as educating management about the benefits. For example, asourcing specialist based in the Philippines office of a multinational tech company said

her company requires preferred hotels to accept the corporate card. The traveldepartment also actively promotes card usage by travelers, meeting with seniormanagers to explain the benefits and tracking employees compliance by utilizing areimbursement tool that requires them to input the name of the airline or hotel propertyused on their trip.

Implement an electronic expense reporting system.Many of the companies in the region that are utilizing corporate cards still use paperinvoices. However, there is a trend toward electronic reporting. When we sell thecorporate card, we sell the Management Information System as an integral part of thepackage,said Ms Gan Ai Im, Head of Cards and Payment Products, UOB.

Replacing the paper process with electronic expense reporting saves both employeestime and the expense of paper. Prepopulation of the expense datathe employeesexpenses are automatically input into the e-report and sent to the traveler and the CTMfor approvalis available and adds to this efficiency. Plus, the data is far more accurate,compared to having an employee manually enter the information.

Consolidate with a TMC.Five or 10 years ago it probably wasnt possible to contract with one TMC for all of acompanys travel needs in Asia Pacific. Most corporations still work with numerousTMCs, which can make data consolidation difficult, because agencies differ in terms ofstandards of data, technological platforms and their tech capabilities.

The differences extend to the nuts and bolts of booking travel, such as how a ticket iswritten, how the fare is broken out, how to attribute revenues, and currency conversionsof origin and destination for air, according to Mark Walton, principal at ConsultingStrategies, based in Deerfield, Ill., USA.

But as multinationals are implementing global programs, theyre seeking to consolidatetheir travel with one TMC. Large financial companies are in the vanguard (see CaseStudy, JPMorgan Chase).


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Some CTMs avoid consolidating with one TMC because they want to maintain theirindependence and ensure they have total ownership of the data. This is especially thecase in Japan, where large companies maintain their own in-house agencies andservice, not cost savings, is still the priority. Even the mega TMCs have had toaccommodate their business models in Japan to this scenario. The Japanese areahead of the world in terms of their electronic industry, but in terms of how they do

business, its still very personal, said Fraser.

Put in place a strong travel policy and enforce it.Having a system to collect, standardize and analyze the data isnt worth a whole lot ifthere isnt a policy requiring travelers to pay with the corporate card, book with the TMC,and use preferred suppliers. One important benefit of getting the data is that it enablesCTMs to monitor compliance and identify leakage from the program.

A May 2007 report on T&E technologies and services by the Aberdeen Group, whichsurveyed 435 enterprises in diverse sectors, found that the rate of compliance tocorporate policies is a key metric in reducing T&E expenses. Eight-four percent of Bestin Class enterprises have established T&E policies, processes and tools, 73 percent

have a consolidated T&E program, and almost 90 percent of their T&E expenses are incompliance (the average is 70 percent).

In Asia, compliance is a huge issue. According to CWT, an average of 30 to 40 percentof travel transactions does not go through the TMC in the region. Obviously, theopportunities for savings are enormous.

Compliance to a program designed to take cost out of a system can be particularlychallenging in some Asia Pacific markets, where personal service is highly valued. Also,cultural sensitivities need to be considered in deciding the best enforcement measures.For example, in Japan mandating compliance to an online-booking tool is considered tooconfrontational; it wont work. A more effective strategy would be convincing travelers of

the benefits to security, since the tool aids with tracking the movement of employees.

Implement an on-line booking tool.A cornerstone of effective travel management is automating processes, in the form ofonline booking, e-ticketing and electronic expense reporting. These processes arecritical to capturing data in a seamless, cost-effective way, cutting down on laborexpenses and paper. As these automated processes become more available in AsiaPacific, corporate travel departments will discover new efficiencies and opportunities forsavings.

An on-line booking tool is a sure-fire way to increase compliance to the travel policy,since the preferred properties and rates are automatically loaded into the tool. Another

benefit is the reduced transaction fees, although this is less apparent in some Asianmarkets, where labor costs are low. Savings can also result from the tools through areduction of the cost of tickets bought by travelers due to visual guilt.

While on-line booking tools are most prevalent in Australia and New Zealand, theirusage is in the single digits in other Asia Pacific markets. Usage of the tools is generallylimited to domestic travel, since the complexity of international travel itineraries in manycases is still better handled by an agent. However, adoption can be impressive wherethe tools are made available. For example, CWT is getting 80 percent adoption rates for


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a couple of companies that are using its on-line booking tool for domestic travel in China,according to Bezer.

Lack of credit cards is one reason the on-line booking systems havent taken off.Another issue is the modest Internet penetration in Asia, said Don Birch, president andCEO at Abacus International. While developed countries like Singapore (53 percent),

Hong Kong (60 percent) and South Korea (25.8 percent) have higher levels ofpenetration on average, Asias growth economies like China (7.8 percent) and India (4.7percent) have considerably less. (Birch said figures are for October 2006.)

Theres a strong predilection to maintain manual systems at the local level, said TomWilkinson, president of TRW Travel Consulting, based in Pennington, N.J., USA. Whena multinational with headquarters in Switzerland, for example, rolls out its global programto a regional vice president, the only reason he will agree to pay $35,000 versus $3,500is because the senior guy in Basel tells me I have to, said Wilkinson.

However, rising wages and higher costs, a natural evolution of the fast-growingeconomies of countries like China and India, will ultimately change the equation. Plus,

and perhaps more importantly, the power of having the availability of the data is sogreat its worth a higher transaction fee, said Wilkinson. It blows through argumentsabout local labor costs. Global organizations recognize that.

A Best Practices Approach to Data CollectionMaximizing the benefits of managing your T&E data requires preparation, patience andcommunication. Deciding how the data is delivered and from whom, who receives it,linkage with your internal systems and type of analysis are aspects that need to beaddressed. Here are some key points to consider:

Do an analysis of your data needs and systems as well as your budgetSet the parameters of a system that balances comprehensiveness of data with efficiency

and ease of use and affordable cost. Determine who are the internal customers lookingat the data, and what their needs? Finance is interested in the return on investment; theCTM wants to identify the savings and lose savings with suppliers; the travelers, inspeedy reimbursement. Balance the projected savings against the cost of investment.

Develop a business caseTravel is a companys second- or third-largest indirect corporate expenditure, somanaging this spend can significantly boost the bottom line. CTMs need to make thecase to senior management as to why the investment in data consolidationincludingconsolidation of corporate card and TMC and implementation of an expense reportingsystems--is worth the investment.

Involve all the partiesWhile the delivery of the data may be easy enough, CTMs need to figure out how theyare going to use it. They need to decide what type of data they want and then ensuretheir internal formats are set up to accept it. The company should work closely with all itspartnersthe credit card association and issuing bank, TMC, suppliersto figure outwhat data they want, what data is available, and how theyre going to use it.

The decision-making process and implementation should include all the effectedpartiesprocurement, IT, accounts payable, human resources, and the CFO. Involving


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these other players will help ensure that the expense management system will integratefully with the corporations Enterprise Resource Planning (ERP) systems, includinginerfaces with the GL, accounts payable, payroll and HR.

Address privacy concerns.Treatment of an individuals right to privacy varies tremendously from country to country

in Asia Pacific, from the extensive privacy laws governing the handling of personalinformation in the public and private sectors in Australia and New Zealand (consideredthe most extensive outside the European Union) to no laws whatsoever in places likeSingapore and Japan. (Some non-democratic states go the opposite extreme. In China,for example, the government monitors citizens access to the Internet in the name ofstate security.)

To make sure theyre in compliance with the stricter laws in the region, TMCs, cardproviders and other vendors generally obtain authorization from their corporate clientsfor the necessary sharing of their data with third-party suppliers. Australias privacy lawgoverning businesses with at least AU$3 million in revenues requires this. Among otherthings, its 10 privacy provisions require them to ensure the information is accurate and

up to date, to have the necessary protections in place (including the installation ofcomputer hardware and software systems), and to transfer the data outside Australiaonly if the recipient in turn is governed by comparative privacy laws.

The standard practice is for the TMC to obtain the travelers consent by signing anagreement allowing the agency to collect and share their name, passport number, andother information with third parties strictly for the purpose of travel analysis. In manycases, consents are required from the corporate in order for the merchant to release thedata on travelers, said Friedman.

CTMs should confer with their HR and legal departments for guidance on procedures toprotect individual privacy regarding the corporate card and TMC traveler profiles. Data-

privacy clauses should be inserted into supplier contracts limiting how the data can beused and for what purpose.

CTMs should also ask their contracted suppliersbe it a TMC, corporate card provider,third-party aggregator, or GDSabout their data privacy standards and practices,including audits. Corporations and TMCs also need to establish which party has liabilityfor travelers data privacy (generally its the company).

Prepare for change management and educate the workforce.Some travelers are in the dark when it comes to understanding the different fare codes.Managers may not understand travel industry terms, which makes it difficult for them todecipher reports on travel spend.

Georgie Farmer, head of travel for Asia Pacific at JPMorgan Chase, based in Singapore.said the travel department consulted with its TMC to provide a user-friendly guideexplaining fare codes for all its business units. Simple language is best, she said. Youdont want to bombard the business with fancy stuff. People also like graphs and charts.

When implementing a data enhancement system across borders, make sure thenecessary resources are provided for training the work forces in those other countries.Also, allow time for implementation. Switching to a system of data consolidation doesnt


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happen overnight. Work closely with your TMC and card provider to iron out anywrinkles.

Improve compliance.If travelers arent booking through the TMC, youll lose detailed data that can help revealyour travel patterns. If they arent using the corporate card, youll have to spend more

time in reviewing the expense report data. If travelers arent using the preferredsuppliers, you risk not meeting the volumes upon which your discounted prices arebased.

Create incentives for travelers to use the card, such as prepopulation of expensereports. Require travelers to fill in the gaps, such as breaking out their spend at the hotelon their expense reports. Educate management and travelers about the benefits of usingthe corporate card and booking with the designated TMC. Show them how their actionscan save on the bottom line. Communicate positive results of improved adherence to thetravel policy.

Conclusion

Enhanced data allows CTMs to assess the performance of the travel program andnegotiate better deals with suppliers. It gives them the control. Whereas data from asupplier may be inaccurate, biased in its analysis, or difficult to obtain, more detaileddata from the card provider, TMC or data aggregator is more reliable and objective. Italso gives buyers credibility at the negotiating table, since it shows they can deliver onyour commitments. Enhanced data also helps you monitor the performance of suppliers.

Probably the most valuable benefit in Asia Pacific, where managed travel is still a novelconcept, is identifying program leakage. By drilling down you can identify noncompliantbehavior, which can result in a tightening of the policy. By matching booked andexpense data, CTMs can identify whether travelers are booking through the TMC andpaying with the corporate card.

Being able to do those will strengthen CTMs credibility with senior management andprocurement. It helps them demonstrate the effectiveness of the travel program in termsof opportunities for savings and efficiencies.

Data is power, and the tools are becoming available for CTMs to demonstrate that theycan deliver savings, service and efficiencies to their company.


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Case Study: /Monash University Implements Enhanced Data

Two years ago, Monash University, which has six campuses in Australia, became thefirst Asia Pacific adaptor of MasterCards Smart Data On-line. The university has issuednearly 2,000 corporate cards, which collectively account for a T&E spend of AU$20

million a year. Heather Bradbury, manager of corporate business systems, based at theClayton campus, has found that the enhanced data reports on the universitys airlinespend are an eye-opener.

We can see where people flew, all the flight segments, whether they went first class oreconomy, and the flight number, she said. Before we only got an airline name and adollar figure. With the more detailed detail, we made discoveries that people wereputting inappropriate things on the card, such as international flights to destinations thatwerent on their academic itinerary. If you went to a conference in America and stoppedin Paris on the way back, we see it and wonder why you did that.

The cardholder and the cardholders supervisor are getting e-mailed MasterCard

statements on a monthly basis, which includes the travelers additional card spendforhotel, car rental, meals and incidentals. Each day Monash University receives a file fromMasterCard with transactions from the previous day, which are uploaded into the financesystem. Cardholders log on and are required to add a GL number before the transactiongets posted as an expense in the SAP financial system. Additional data, such as thename of the conference the person attended, might be added as well, Bradbury said.

The university is also auditing a sample of reports. Were running merchant categoryexception reports and merchant reports. If the expenditure looks personal, we ask thecardholder, what did you buy from that shop? If its an inappropriate expense, we ask tosee the receipt and the staff member is asked to reimburse the university. As thecardholders know that our internal auditors are checking their transactions, we have a

high compliance with the purchasing rules.

Bradbury said her department relies on such clues as a merchant name to identifyexpenses that might be out of policy. Wed love to have the hotel e-folio, whichitemizes the hotel spend, such as the rate, parking and mini-bar, and would make thisprocess easier. She said enhanced data for rental cars, such as number of days and therate, would also be valuable. (Currently only the name of the car company and a dollaramount is available.). Hotel and car-rental enhanced data should be available from acouple of initial suppliers in the near future, according to MasterCard.

The university is also using an on-line TMC booking tool for its domestic travel, whichsaves on the TMC booking fee. It also uses two TMCs. She said about 20 percent of

traveling academics dont book through the TMCs. Were looking at approvalprocesses to increase compliance to the TMC. Another issue: because MasterCard isobtaining the enhanced air data from the TMCs, the university is missing enhanced airdata for travel not booked through the TMC, Bradbury said. A purchasing strategy teamis currently reviewing expenditure, especially non-preferred supplier spend, with the aimof creating a strategy for reducing costs.


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Case Study: JPMorgan Chase Consolidates and Tightens Travel Policy in AsiaPacific

JPMorgan Chase has been moving toward consolidating its suppliers and is usingenhanced data to get more control over its spend. A year ago, the bank had 23 travel

agents serving its travel needs in 13 countries, according to Georgie Farmer, head oftravel for Asia Pacific, based in Singapore.

The bank, which has about 5,000 travelers in the region, had a T&E spend of US $75million in 2006.Its also in the process of consolidating its corporate card around theglobe, and is similarly rolling out a standardized expense management product. Theprogram is still evolving and Farmer said there were some inconsistencies in the data.Components of the data have to be manually keyed in by an agent at some locations,and although the TMC standardizes it, there are gaps. For example, domestic air andhotel booked on local CRSes in Japan and China are difficult to standardize and mergewith regional or global data, due to different languages and a lack of CRS integration intothe GDS. Theyre trying to find a solution she said. Its coming.

JPMorgan Chase is focusing on ways to increase compliance. Monitoring travelers isone way. Some major global lines of business have asked for detailed reports.

The company has also added supplements to its global travel policy that address theAsia Pacific market. While travelers based in Asia are allowed to fly business within theUS when the cost of their business-class airfare is no more expensive than coach, theyare required to fly coach domestically in Asian countries where business-class fares canbe much higher, said Farmer. Also this reflects the improvement in airline service inmajor markets such as India and China, making coach an acceptable option.

Class of hotel is more flexible, depending on the travelers specific requirements, such

as traveling with a client. In addition, "we're looking at demand management. If you haveto take 10 percent out of T&E, pre-trip approval is one way of getting people to thinktwice about traveling. Maybe they can combine meetings. But it isn't easy to gettravelers to change their ways. People still want to fly the national carrier, althoughanother high-quality carrier may be cheaper." Getting parts of the business who areaccustomed to staying at a top-end five-star hotel to choose a lower priced hotel istough. In Hong Kong, one hotel can be more expensive than the others, and they are notout of policy by choosing it. "We need to educate them," said Farmer, noting that thelower priced five-star properties offer pretty much the same level of service. "Over time itwill evolve."

Documents

White Paper: Data Optimization in ASPAC